23 September 2015

Hansteen Holdings PLC

("Hansteen" or, the "Company")

Hansteen acquires two UK industrial assets for £41.1 million

Hansteen (LSE: HSTN), the investor in UK and continental European industrial property, announces that it has acquired two UK industrial assets in Derbyshire and the North East of England for a combined price of £41.1 million, inclusive of purchase costs.

Hansteen has exchanged contracts to acquire West Hallam Industrial Estate from DV4 Properties West Hallam Ltd, an SPV which owns West Hallam Industrial Estate, Ilkeston, in south Derbyshire for £27.3 million, reflecting a triple net initial yield of 6.2%. Completion is due to take place on Thursday 24 September.

Hansteen has also exchanged contracts to acquire Belasis Business Park, Billingham, Teesside, for £13.8 million (inclusive of purchase costs), reflecting a net initial yield of 7.0% which rises to 8.3% on contracted rent. Completion is scheduled for Tuesday 29 September.

West Hallam Estate covers 118 acres and includes 106 buildings, totalling 1.28 million sq ft and benefits from large areas of open storage land.   The entire site is let to Norbert Dentressangle (which in June 2015 was acquired by XPO Logistics, a top ten global provider of supply chain solutions), on two agreements, and produces a total annual income of £1.7 million. 777,556 sq ft across 26 buildings is let on an eight year FRI lease, from 31 October 2010 at £1.2 million per annum, with an open market rent review in October 2015.

The balance of the estate is subject to a management agreement with the tenant until 30 October 2018, at a fixed fee of £500,000 per annum plus 50% of the revenues received over £1 million per annum. The tenant is responsible for all lettings, maintenance, and repairs typical to a commercial lease and it carries the cost of running and maintaining the site and benefits from the income on a shared basis with the landlord. Annually, the landlord has the ability to break this agreement and operate this element of the estate directly. The average rent per sq ft is £1.32 and the purchase price represents approximately £226,695 per acre and an average capital of £20.82 per sq ft.

Belasis Business Park provides 33 purpose-built, detached and terraced business units, totalling 129,136 sq ft on a 62 acre site including 1.67 acres consented for additional development.  It is 84% let to 19 occupiers, generating annual contracted income of £1.15 million. Three substantial adjoining freeholders contribute to the running costs of the Park. The Park has an exceptional WAULT of over 10 years and major tenants include Tracerco (part of Johnson Matthey), ABB Group and Worley Parsons. The long lease profile is a direct result of the occupiers' confidence in the long term success of the Teesside chemical sector and the huge capital investments that some of them have made in the location.

Ian Watson, joint Chief Executive of Hansteen, commented: "We are very pleased to have acquired these two assets so soon after having raised equity from our shareholders. Both assets offer excellent income security together with the opportunity to enhance returns through asset management." 

James Havery, UK Director of Hansteen, added: "The income return provided by a very strong covenant on the West Hallam deal has real scope for enhancement through the imminent rent review together with the option of terminating the management agreement and operating that element of the estate ourselves in a traditional Hansteen manner.   

"At Belasis, given a good proportion of the park is securely let, our local asset management team can concentrate on the 16% void and the shorter unexpired terms.  The composition of the asset provides us with a variety of exit routes; be that sales of long dated investments, sale to occupiers or retaining as a whole and working through the void."

DV4, advised by Delancey, acquired West Hallam Industrial Estate in 2011.

Paul Goswell, Managing Director of Delancey, said: "The investment has performed well during DV4's ownership, but going forwards the fund will be focusing on the prime distribution sector through its db symmetry platform and it was the right time to sell West Hallam."

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HANSTEEN HOLDINGS PLC

Hansteen Holdings PLC (LSE:HSTN) is a European industrial REIT that invests in properties with high yields, low capital costs and opportunity for value improvement across the Netherlands, Germany, Belgium, France and the UK.

Founded by Morgan Jones and Ian Watson, the Company listed on Aim in November 2005 raising £125 million. In 2009, it raised a further £200.8 million by way of a Placing and Open Offer and moved to the Official List, converting to a REIT shortly thereafter. In April 2011, the Company raised a further £150 million by way of a Placing and Open Offer.

At 30 June 2015, Hansteen had total property under management of some 507 assets with a value of £1.5 billion.